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Not Even Beggars Accept Zimbabwe’s New Coins

by Björn Schöpe

April 2, 2015 – To remedy the small change shortage, Zimbabwe issued the so-called bond coins. So far, the approach has proven ineffective. That may be due to the fact that the Reserve Bank does not bring it home to the people what bond coins actually are.

Let’s recall the initial situation: Zimbabwe experienced a hyperinflation for years on end. In 2009, the African country stopped issuing money in its own name because nobody trusted in the banknotes with the many zeros anymore – let alone the worthless coins. Since then, various foreign currencies function as official means of payment, like the South-African Rand, the British Pound, and the US Dollar. However, it is only the banknotes of these currencies that make their way to Zimbabwe, while small change is lacking everday-day life. In order to ease the situation prices are rounded up or change is being paid in kind.

John Mangudya, Governor of the Reserve Bank of Zimbabwe, has long complained about the situation. His solution is the so-called bond coins. The name is said to derive from the the government reportedly backing the money with a 50 million US Dollar bond to finance the minting. Thanks to this bond the money has the same denominations and value as US cents although it may only be used in Zimbabwe. For the time being, Zimbabwe has ordered coins worth 10 million US Dollars with the South African Mint. Since December 18, 2014, coins have been issued with the face value of 1, 5, 10, and 25 cents, and a 50 cent coin was scheduled for March.

However, people in Zimbabwe are afraid that these coins may only be the first step towards returning to their own currency – and to hyperinflation. Although Reserve Bank governor Mangudya keeps on assuring that the Zimbabwean dollar is not planned to be introduced again, many people still reject the bond coins. To them it is money from Zimbabwe and hence worthless. That creates a vicious circle: those who fear that they might not be able to pay with these coins will not accept them in the first place.

The newspaper Southern Eye reports that even public bus drivers do not accept bond coins. The reason: this money is of no use when they attempt to bribe policemen because these guardians of the law likewise reject the new small change. It is not difficult then to believe a Reuters correspondent when he told his story: When the correspondent was waiting at a traffic light, he was approached by a beggar who begged for money so persistently that he finally gave that chap a couple of bond coins. The beggar, though, burst into laughter, said ‘no, thanks’ and turned to the next car.